The Hindu Business Line : `Market yet to gauge impact of overseas acquisitions'

Corporate India is yet to fully comprehend the impact of overseas acquisitions by domestic companies, feels Mr Ved Prakash Chaturvedi, CEO, Tata MF, adding that local players that have shopped abroad will soon start deriving great value from these deals — which may well be reflected in their stock prices. He also dwells on two very relevant issues: The changing perception of debt and the growing importance of close-end products. Excerpts.

The indices have crept up markedly since their early-May fall. How do you read this?

Yes, the days when the market was dropping significantly are behind us, at least for now. Investors who had entered when the index fell substantially have already seen it go up from the level of 9,000 points. The big question is did a lot of people spot the opportunity that arose then? Or, did they generally shy away from taking exposure? The latest situation, with the index ruling at about 10,700-10,900 points may be seen from that perspective too.

Interest rates are noticeably hardening. Your comments.

Right. The interest rate hike cycle has had its share of news. The rate regime is quite dynamic at the moment. RBI clearly has taken a cue from global developments. The whole thing, including the latest stance taken by Fitch Ratings, has brought more attention to debt and sections of the market are already warming up to certain categories of fixed income products. More specifically, we will have to ascertain how mutual fund investors view these developments, especially in the context of the impact on the returns that debt funds normally generate.

Close-ended funds seem to be your latest favourites. How do you explain this?

While open-ended funds have obviously made their mark, there is no point in avoiding the close-ended variety in the present-day scenario. In fact, a close-ended scheme is structured in a way that prompts an investor to stay invested for the entire term in question. The fund manager concerned need not worry too much about possible movements in assets. All this makes us enthusiastic about this class of products. We hope to strike deeper roots in the close-end space.

Coming back to equity funds, what can investors expect in the days ahead?

There is one point that needs to be brought to the forefront. This relates to overseas acquisitions by Indian companies. The market is yet to gauge the effect of such strategic moves.

As you know, a number of local players are already doing well on the exports front. Now, some of them have decided to step up their presence internationally. A series of such deals have taken place in the last couple of years. Several instances, concerning acquisitions in sectors like engineering and pharmaceuticals, spring to mind. These will help the companies concerned move up the value chain. And in times to come, the impact will be felt more acutely.

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